A credit cards APR means the Annual Percentage Rate of interest charged. IT is common now for cards to offer a zero-percent initial APR which can be on purchases, balance-transfers or sometimes both. This initial 0% period can either be used to avoid paying any interest on existing borrowing or can be used to make a profit.
0% interest for an initial period can be used to avoid having to pay an interest at all on existing borrowing if the 0% applies to balance transfers. This is done by transferring the existing borrowing onto the new card. This is a big advantage as repayments can be applied to decreasing the borrowing itself rather than doing little more than paying off the interest each month.
Another use of 0% APR cards is to make money by transferring the available funds to a high-interest bank account, so that the interest becomes profit when the card is repaid before it starts charging any interest. This method can even be applied to forms of profit making other than interest-paying bank accounts, such as business ventures, although this obviously carries significantly more risk and should be done only with extreme caution. It is rumored that the first batch of computer hardware for Google was bought using credit cards, and movies such as Clerks have also been financed in this way.
Cash advances often attract a higher rate of interest and this interest is sometimes payable from the date they are obtained rather than the billing date. It is sometimes the case that repayments onto the card account are applied to all other transactions before they are applied at all to the cash advances.
A credit cards APR is one of the big areas one should consider when choosing between competing offers, but other factors should also be taken into consideration. Fees are one such factor, as are rewards such as air miles or cash-back which can be very beneficial.
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